Neoclassical economics is sometimes criticized for having a normative bias. In this view, it does not focus on explaining actual economies but instead on describing a "utopia" in which Pareto optimality applies. In the opinion of some developers of an alternative approach, the purpose of neoclassical economics is "to demonstrate the social optimality if the real world were to resemble the model", not "to explain the real world as observed empirically". [ 1 ]

Large corporations might perhaps come closer to the neoclassical ideal of profit maximization, but this is not necessarily viewed as desirable if this comes at the expense of neglect of wider social issues. The response to this is that neoclassical economics is descriptive and not normative. It addresses such problems with concepts of private versus social utility. [ 2 ]

Hi,
I am doing M.Phil in Economics. As I am from Non-Economist Background, I am having some problems. I have a question about Profit Maximizing quantity.
In cost analysis economists says that a point where Marginal cost curve (MC) intersects Average Cost (AC), total cost is minimum at that...

I know my opening stock and closing stock figures and I have worked out my annual profit using marginal costing. I also know my fixed overhead absorption rate.
Using these figures, what formula do I use to calculate my profit using absorption costing?